PC makers face up to tough times

PC makers face up to tough times

The warnings are in. Intel, Gateway and Apple Computer led the list of companies issuing disheartening notes about the PC's apparent decline.

All three of these vendors this past two weeks said laggard desktop and notebook markets have their upcoming financials looking less than spectacular.

Analysts seem happy to chime in with their forecasts of a fourth quarter slowdown in PC sales.

International Data Corp. (IDC) this week predicted a two- to three- quarter correction may be on the horizon. With sentiments like these in the air and chip makers like National Semiconductor and Motorola moaning over a depressed market, the immediate future looks grim for the high tech world's most famous machine.

The same analysts that warn of the PC's short-term decline, however, assure the industry that the desktop doldrums will likely not last for too long. Industry pundits point to the stock market's volubility and cycles in market demand as reasons for both the PC's slump and its eventual return.

"It is like the party is over," said Roger Kay, manager of desktop PC hardware at IDC. "It is this sobering moment where people are taking stock of where we are."

Kay attributes a large part of sagging PC sales to the stock market's slide. He urged that consumer purchases fall first when the economy slows due to a depressed overall outlook. For this reason, vendors like Gateway and Apple with a heavy dependence on consumer markets feel the initial brunt of market woes.

Kay said consumers are taking a look at their stock portfolios and 401k retirement plans and concluding that the money really is not there to warrant a PC upgrade. While a portion of the population does desire the ever-increasing processing power of new machines, many users seem satisfied with what their current machines can offer, he said.

With PCs still carrying a significant price-tag, users now seem more apt to purchase Internet appliances, as well as digital cameras, MP3 devices, Web-enabled smart phones and PDAs (personal digital assistants). These devices give users access to many of their favorite applications and do not burden their wallets quite as much.

Douglas Tuttle, a partner with DeLoitte Consulting LLC in the global technology practice, sees these emerging devices as a major threat to the PCs continued dominance.

"What we are seeing is that we are definitely moving to a post-PC world," he said. "We are seeing an explosion of alternative devices. What is going to happen is that the PC is going to become more like a server in your house. With the advent of connectivity protocols like Bluetooth, you will have PCs more in the background."

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